The purpose of the study is to evaluate the effectiveness and safety of dermally applied DHT Gel preparation in elderly hypogonadal men. Effectiveness will be determined on basis of circulating androgen levels (DHT + T) and pharmacological response to DHT (gonadotropin suppression, effects on bone formation markers, muscle strength, body composition and libido) compared to patients using placebo gel. Data received from this study will be used to establish DHT Gel doses in a future phase III study of elderly hypogonadal men. The hypothesis to be tested is that this novel androgen gel preparation may provide safer and equally effective therapy for elderly men with hypogonadism than is currently available. Patients will be monitored for testosterone changes as well as other levels such as gondotropins, estradiol, prolactin, lipid panel, chemistry tests and blood hematology. Prostate evaluation will be performed by rectal examination in addition to prostate ultrasound plus prostate specific antigen level. Bone density studies, body composition, muscle strength testing and urine flow rate will be monitored. Questionnaires will be filled out by the patient regarding mood and sexual function. Patients eligible for the study will be males above the age of 60 who have been diagnosed with testosterone deficiency requiring testosterone replacement. Selected patients should be in good health as determined by medical history and physical examination, with no pre-existing prostate abnormalities. Patients will undergo screening to confirm they meet criteria for the protocol. Patients will be randomized to one of three doses of gel: Group A will receive 32 mg DHT-gel, Group B will receive 64 mg DHT-gel and Group C will receive placebo. Gel will be applied to multiple sites. Duration of drug exposure will be 90 days. Patients will be monitored on day 0, day 1, day 30, day 60, and day 90. The significance of this study is that the gel will provide an easier delivery system compared to currently available forms of androgen replacement. The new gel formulation allows a measured does to be given and rubbed on the skin by the patient. Future plans include an extension phase to study the long-term effectiveness and safety of DHT-gel as a means to provide androgen replacement in elderly, hypogonadal men. The extension period will allow for evaluation and treatment for an additional 24 months.